The German chancellor, Angela Merkel, demanded today a quick resolution to protracted negotiations over the takeover of Opel, General Motors' European business, which includes Vauxhall in Britain.

GM board members delayed a decision on Friday to back a consortium led by the Canadian car part manufacturer Magna that would save the majority of the 25,000 Opel jobs in Germany.

The delay is said to be down to GM's concern that the deal would dilute its interest in the new company. GM executives also want to know whether German government support to Magna – totalling €4.5bn (£3.9bn) in state loan guarantees – would be available to the rival bidder, RJH, a Belgian private equity firm.

In a interview with German ZDF television, Merkel expressed her regret at GM's failure to choose Magna and said that a decision was "urgently needed".

"The conflict of interest could be that we think Magna has made a very good offer ... which makes GM a minority shareholder in the whole set-up, and there may be voices at GM ... who'd prefer that this minority shareholding wasn't so marked," she said.

The deferral of a decision raises the possibility that GM could still place Opel in insolvency.

The business secretary, Lord Mandelson, has been working all weekend to find a way of protecting British jobs. Mandelson has warned Merkel not to politicise negotiations ahead of German elections next month.

If the Magna consortium wins the Opel unit, unions fear up to 20% of Vauxhall's 5,000 jobs could be lost at the Ellesmere Port and Luton factories in what would be a disaster for regional economies and Labour's industrial policy.

Opposition is growing in the UK to the bid by the Magna consortium to take over Opel/Vauxhall. Tony Woodley, general secretary of the union Unite, told Magna executives last week that the union refused to sanction their bid. Unite believes that Magna would sack 1,000 of Vauxhall's 5,000 workers and slash the value of their pensions if it took control of Opel. Officials believe that the rival bidder RHJ would spread job cuts more evenly across Europe, which would result in fewer losses in the UK.

Mandelson has kept open his promise to provide up to £500m of loan guarantees and loans to the winning bidder depending on how many jobs and how much production it plans to maintain in the UK. A spokesman for Mandelson would not comment other than to say: "We will support Vauxhall production in the UK."

The board of GM met over the weekend in Detroit to discuss which of the two bids to recommend. A recommendation is expected to be made later this week.

If the GM board recommends Magna's bid without setting any conditions, it will then be passed to the Opel Trust to make a final decision. The trust, set up to run the carmaker after its parent company filed for Chapter 11 bankruptcy, is made up of representatives of the German government and GM.

GM is concerned that Magna, which is backed by the Russian bank Sberbank and the oligarch Oleg Deripaska, will exploit the US company's intellectual property to make cars outside Europe. Opel is expected to run out of money in November, so a new owner must be found soon.